Sensex Jumps 1,109 Points as Finance Minister Nirmala Sitharaman Sparks LTCG Tax Debate

Nirmala Sitharaman, the Finance Minister of India, has sparked a debate on the long-term capital gains (LTCG) tax. This led to a surge in stock prices. The minister said that fiscal discipline is not a matter that should worry investors.

As the government has kept the economy on a sound footing and been careful with its spending and borrowings.

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India's foreign portfolio investors have been unloading Indian stocks in record numbers. With a staggering Rs 3 lakh crore worth of shares sold this year alone.

The finance minister's recent remarks, however, have sparked optimism that the government may revisit its tax policies, specifically the long-standing LTCG tax and securities transaction tax, a move that foreign funds have been advocating for years.

The finance minister also acknowledged that the rupee has depreciated significantly over the past year and a half. And RBI will continue its efforts to prevent excessive volatility. noting that rBI is not trying to fix the rupee.

It is trying to stop the volatility, and for that there is a lot of effort from their side, she said.

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According to Hitesh Sawhney, partner at Price Waterhouse, a relook at the taxes related to the markets may be timely. "A (zero) tax rate on LTCG, linked to a relatively longer holding period, could reward patient capital, encourage investors to remain invested in India and strengthen India's relative capital market attractiveness."

India's benchmark indices, the Sensex and Nifty, posted significant gains, with the Sensex surging 1.5% to 73,034 points and the Nifty jumping 1.6% to 22,722 points. The recent uptick has been attributed to the finance minister's remarks. Which have been viewed as a positive development amidst a period of rapid outflows of foreign capital from the country.